Daimler Provides Sharia-Compliant Loans To Mid East Buyers

When Westerners think of Sharia -- the strict code of Islamic law -- we tend to think of...unpleasantness. Stonings, beheadings: that sort of thing. However, Sharia also covers financial issues, including lending practices. Specifically, Sharia prohibits the charging of interest on loans. That's been bad news for many Western automakers who provide financing, but Daimler recently reached an agreement with with several Middle Eastern companies to offer Sharia-compliant lending in that part of the world. Daimler may not earn interest on those auto loans, but given the Middle East's appetite for Mercedes-Benz rides, it's still an awfully big win. [egmCarTech]

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In a world where car companies are desperate to move their product its interesting that it just occurred to Benz how to capture a 1.5 billion person niche.

Duh
Posted: 10/16/2009 11:55am PDT

This might help them move cars in some of the poorer countries, but Most Saudis who can afford Mercs buy them cash. Also, no interest = price hike (sure you paid no interest, you just paid more for no better a car...)

Mantel Stars
Posted: 10/16/2009 12:12pm PDT

Well, just as long as none of those Mercedes-Benzes runs with any ethanol in the tank, since that might be a sin for those same observant Muslims:
http://www.greencarreports.com/blog/1019096_islamic-scholar-suggests-using-ethanol-powered-vehicles-may-be-a-sin

Richard
Posted: 10/16/2009 12:15pm PDT

@shy: And equally interesting that it HASN'T occurred to anyone else.

greedo
Posted: 10/16/2009 12:16pm PDT

I could see this in Pakistan, India, Indonesia...but does the UAE really need to finance anything? They pay cash for skyscrapers...

Richard
Posted: 10/16/2009 12:17pm PDT

@Duh: True, however, there's something to be said for appearing culturally sensitive. Not that the Mercedes brand needs much buffing, but this certainly won't hurt the way that the company is perceived.

marquis
Posted: 10/16/2009 12:52pm PDT

So what does it really take to make a loan sharia-compliant...?

Richard
Posted: 10/16/2009 1:03pm PDT

@Marquis: Not being an Islamic scholar, I can't say for sure, but I believe not charging interest is the key component. And the late-payment penalties are probably steeper -- MUCH STEEPER.

carguy
Posted: 10/16/2009 4:38pm PDT

perhaps next Mercedes will come up with kosher produced gas

Franko
Posted: 10/18/2009 2:38am PDT

No interest on loans? Forget Daimler - how do banks do anything over there?!